Closeouts and Excess Inventory. They Won’t Save You In A Recession.
If the economy goes into a recession (most economists believe there is a good chance of this happening in the next 24 months), you may need to clear warehouse stock from your inventory to survive a downturn. Having overstock inventory taking up valuable space in your warehouse can be costly if the economy goes South. Start thinking now about getting rid of closeouts and excess inventory. Closeout brokers, buyers for overstock inventory, and inventory liquidators can help you.
About 81% of small businesses anticipate a recession this year as the Federal Reserve continues to raise interest rates to attempt to combat inflation. There will likely be more closeouts and obsolete inventory on the market in 2023 than anytime in the past few years. This is due to the large amounts of inventory imported in 2022, much of it coming in too late to meet deadlines. Closeout brokers and overstock inventory buyers can help relieve the stress of these situations by helping importers move overstock and dead inventory. If you imported Christmas inventory that didn’t arrive until February, it may be better to clear warehouse stock and take a loss so you don’t have to sit with the inventory and incur excessive storage fees. A warehouse filled with dead inventory can be costly as 3PL warehouses increase their storage and handling costs. This is a scary thought for many small businesses, especially as most were only just beginning to recover from the recession caused by the COVID-19 pandemic. Unfortunately, these macroeconomic ebbs and flows of the economy are a natural part of life and difficult to control from an organizational standpoint. Closeout brokers, also known as excess inventory buyers and surplus inventory buyers, play a valuable role in keeping inventory moving so it doesn’t take up valuable warehouse space.
Throughout the course of a recession, small businesses may need to ask for financial help, even if it’s expensive. It is possible to sell excess inventory and overstock inventory to closeout liquidators and this will raise cash to pay expenses. Small companies that allow their inventory to grow and get out of control may find they tie up valuable warehouse space with dead stock that should have been liquidated long ago. Old inventory, canceled orders, discontinued merchandise and closeouts have a way of piling up in the warehouse. It is especially important to contact inventory liquidators who can help you get rid of dead merchandise because if you accumulate too much inventory you will pay a lot of money to store it either in your warehouse or a 3PL warehouse. Don’t think of this as a sign of failure. Instead, try to get ahead of the curve by securing financing before you actually need it. You’re much more likely to be approved for a business line of credit when your company profits are going well, so do what you can to qualify. If you apply in the middle of a recession, it’ll be harder to qualify so it’s an action item worth pursuing in advance.
One of the best ways to prepare your business for a recession is to carefully examine your expenses and take a close look at any excess inventory that can be donated or sold to liquidation buyers cheap. Look for any areas where business expenses can be reduced and try to do this as early as possible. If you have an opportunity to get rid of dead stock, take it when you can. The more time that passes with your SMB operating at increased efficiency, the more money you’ll save and the more prepared you’ll be in case of a lasting recession. Closeout buyers and liquidators are closeout wholesalers that can help you and buy obsolete inventory from you to make room in your warehouse and free up cash. Examine your costs and determine how to increase the variability of expenses or decrease overall expenses. Transitioning to a professional employer organization (PEO) or human capital management (HCM) platform can help you increase the variability, while cutting unnecessary expenditures can help you decrease overhead costs.
Take the time to clear warehouse stock or contact product liquidation companies who will help you find a home for dead inventory sitting in the warehouse. Also, if you have an Amazon business and sent too much inventory to Amazon you can liquidate it and do a removal order to get your merchandise back. Look into your current staffing situation. You should have the right leaders in place to maintain focus on the goals and priorities of the company. Inventory liquidators specialize in buying closeouts, overstock and discontinued products that are no longer selling or sell slowly. Do what you can to retain your top talent. You should also inquire about whether your teams are being productive and delivering at the level they need to be to advance your goals. Opportunities to outsource and make your operations run more efficiently from a cost perspective, particularly with a solution that provides HR consulting expertise, can help you scale wisely to mitigate the need for downsizing warehouses or shutting down operations entirely. In addition to working with a PEO, there are several automation options SMBs can explore to get the best practices guidance they need.
While it’s unlikely that small businesses entering a recession may be able to provide further financial help to their workforce, resources and guidance can go a long way. Some employers offer financial tools as a part of their benefits and wellness offerings, such as retirement or 401(k). If your company has this type of assistance available, tell your employees how to access it. Closeout distributors and overstock inventory buyers are often smaller, family run businesses so they may not offer retirement plans. These are often overlooked, resources that you can promote to your employees. If you want to sell surplus inventory and are looking for an inventory liquidator with experience, try a simple Google search and use terms like: closeouts, liquidate excess inventory, liquidate merchandise, dead stock, sell old inventory, closeout companies, surplus inventory buyers, need to clear inventory from warehouse and liquidation companies.
The driving force of success behind any closeout business is relationships—particularly with their clients. Loyal customers may reduce their spending, but if you have a good relationship, they’re going to stay committed to you instead of turning to competitors. Due to the pandemic, small businesses have been forced to liquidate inventory, downsize 3PL warehouses and even shut down operations completely. If you are an Amazon seller you may be particularly hard hit due to excessive storage fees and costs, or maybe the cost of goods is too high and you have too much inventory that arrived late. If you are trying to make room in the warehouse for new products, it may be beneficial to you to liquidate excess stock at FBA warehouses and move on to new products. Try to continually evaluate your business relationships and take the time to build meaningful connections. This should include everyone from customers and prospects to employees and suppliers. Always work to strengthen stakeholder relationships throughout your company, regardless of the state of the economy. Consider divesting products or services that are no longer performing. Get rid of old inventory that no longer fits into your line, and sell excess stock from previous seasons or with old packaging. Also, if you have no need for certain inventory be sure to get rid of it to inventory liquidators and other buyers for closeouts. If you find that most of your business comes from one or two clients, it’s a good idea to consider expanding your services to new prospects. This helps reduce the risk of eliminating your entire cash flow if one client pulls back on spending during a recession. Another action item is reviewing how you evaluate the credit worthiness of clients and customers. If you do business with individuals who may not be able to pay their invoices, it may cause problems for you later on.
Every recession presents a unique opportunity for closeout businesses to expand and diversify their offerings. Try to think of innovative products or services that you can promote to expand or diversify your offering, without raising business expenses. Think about how to salvage overstocked goods in your warehouses and clear out warehousing space for new projects. Leverage technology or automation to improve business unit economics. Keep an eye on what your competition is doing, maximize organizational efficiency and explore new markets. When the world outside of your company is changing quickly, it’s important to protect your closeout business and look for liquidation buyers who can take merchandise stranded in the warehouse that you may want to get rid of urgently.
In difficult times, paying off debts can seem tempting. However, doing so can quickly deplete your cash reserves, which can leave you in a tough spot if you experience cash flow problems down the line. To relieve cash flow problems you can convert dead inventory to receivables quickly once you make the decision to get rid of dead stock that no longer fits your line. Once you have determined an item is excess inventory you will have an easy time to donate it or get rid of it cheap. When going into a recession, assess the interest rates you're paying on your debt, and consider focusing on paying down the highest.
If your cash reserves are already low, you might also consider looking into potential financing options, especially if you have seasonal cash flow issues in your business. Having a line of credit already established with your lender might save you stress in difficult times. Just make sure you collateralize the load against good inventory, not dead inventory you can’t clear out of the warehouse. Once old inventory sits in the warehouse for years, it will become costly and difficult to sell.
Merchandise USA is a wholesale closeout liquidator in business 38 years. We specialize in inventory liquidations and taking old obsolete inventory that isn’t selling. We have special markets for deeply discounted closeouts and we can help you get rid of stock so you have room for new arriving products. Sell us your closeouts, overstock inventory and excess merchandise so we can help you by reducing excess inventory and making room in your warehouse.
